The House passed legislation Thursday to terminate the estate tax, in a vote that saw only seven Democrats join Republicans in defiance of President Barack Obama's threat to veto the bill.
The bill to end what the GOP calls the "death tax" was part of group of several tax-related bills that Republicans called up this week, just as millions of Americans were paying their income taxes. Several bills were passed Wednesday, including proposals aimed at stopping the IRS from injecting politics into decisions about whether certain groups should get tax-exempt status.
Republicans on Thursday pushed through a bill to repeal the estate tax, which they say is making it impossible for people to hand down family farms to the next generation. Despite the House vote, President Obama has said he would veto the legislation. Photo credit: Shutterstock
The estate tax has long been on the GOP's list of policies to eliminate. Under current law, people are hit with a 40 percent tax on the transfer of assets from one generation to the next, once those assets hit a certain value.
Republicans say death should not be a taxable event, as it only makes it harder for people to transfer wealth to their relatives when they die. The sponsor of the bill, Rep. Kevin Brady (R-Texas), used Thursday's debate on the bill to talk about one brother and sister who had to sell off two-thirds of a farm they inherited just to pay the taxes.
"These are real-life examples of how the death tax is the wrong tax at the wrong time, and hurts the wrong people," he said. "It's the number one reason family owned businesses and farms aren't passed down to the next generation."
Several Republicans cited their own experience with the estate tax, such as Rep. Mike Kelly (R-Pa.), who said his own family created a business that he worked at years later.
"God forbid these hardworking American taxpayers are allowed to pass on to the next generation that which they were able to accumulate," Kelly said.
But most Democrats opposed the bill, after the White House warned Tuesday that Obama would veto it. The White House said it would only help the wealthiest people.
"Repealing the estate tax exclusively benefits just the wealthiest one or two estates out of every thousand — which would receive a tax cut averaging more than $3 million each — because current law already exempts more than $5 million of wealth for individuals and more than $10 million of wealth for couples from the tax," the White House said.
Obama's veto threat makes it highly unlikely the bill can become law. Even if the Senate passed it, both chambers would need to override that veto with a two-thirds majority — today's 240-179 vote in the House indicates an override is virtually impossible.
House Democrats essentially argued that the rich should pay the tax because they have the money. For example, Rep. Jim McDermott (D-Wash.) argued that the people who pay the tax have "no problems whatsoever" paying it.
McDermott also argued that people who have to pay it are usually given plenty of time.
"If you die and you have this great big business, you have five years to pay that tax," he said. "You don't have to pay it the day that they bury the body of your grandfather or your mother, your father, whoever. You have five years to pay it."
Some Democrats argued that the bill should be rejected because it would create $269 billion in new debt over the next decade. But Democrats had no trouble recently approving a bill to avoid a cut in Medicare physician reimbursements, which was paid for by $141 billion in new debt.
The House passed that bill in March with only four Democratic "no" votes, and the Senate approved it Tuesday in a vote that saw all Democrats vote for it. House Speaker John Boehner (R-Ohio) officially sent that Medicare bill off to the White House for Obama's signature Thursday morning.
Between the estate tax vote and the Medicare vote, the House has now voted to increase the national debt by more than $400 billion over the next 10 years. However, Republicans have argued that bills changing the U.S. tax code are typically not offset with other spending cuts.